The UAE continues to introduce initiatives and regulatory frameworks to attract cryptocurrency companies and investors, particularly through its financial hubs in Dubai and Abu Dhabi.
Consider the latest updates: The UAE has announced value added tax (VAT) exemption for cryptocurrency remittances and conversions.
The changes announced by the UAE will come into effect on November 15th.
On October 2, the Federal Tax Administration (FTA) published Cabinet Decision No. (100) of 2024 updating the administrative regulations related to VAT.
The updated Executive Regulations include more than 30 amendments that impact a variety of industries.
The country’s federal tax authority plans to apply these exemptions to the management of investment funds and other crypto-related activities, according to details shared by business consultancy PwC.
Additionally, PwC reports that the exemption for transfer and conversion of crypto assets will be treated as effective from January 1, 2018.
Additionally, the proposed amendments also address input tax recovery for virtual currency companies. PwC explains that in the UAE, cryptocurrencies are defined as “an expression of value that can be digitally traded or converted and used for investment purposes.”
UAE wants to become crypto friendly
While some countries, including China and India, have taken a step back in adopting cryptocurrencies, the UAE has embraced them.
The country has been actively working to create a favorable environment for blockchain and crypto businesses. The Dubai Virtual Assets Regulatory Authority also plays an important role in regulating virtual assets in the UAE.
Exemption from VAT on crypto remittances and conversions could attract more crypto businesses to the UAE.
The country’s positive outlook for cryptocurrencies is evident in the growth of the market. A recent report by Chainalysis highlighted that the UAE received over $30 billion in cryptocurrencies from July 2023 to June 2024.
This figure puts the country on top as the third-largest crypto economy in MENA. Chainalysis also cited the country’s increasing number of venture capital funds and blockchain businesses as factors contributing to the UAE’s growth.